Refinancing is any time that you change your mortgage during the current term of the mortgage. You may change the mortgage for a lower interest rate or the amount of the mortgage. Some people will take advantage of a low mortgage interest rate and increase their mortgage to pay off debt that they have that is at a high interest level. Refinancing can make sense when you look at the over all financial picture to see if it would benefit you to make the change. When you do decide to refinance and break your current mortgage term, you will end up having to pay a mortgage penalty. The mortgage penalty will either be three months interest or IRD (Interest Rate Differential) which ever one is greater on a fixed rate mortgage. If you have a variable rate mortgage you will only have to pay the 3 months interest penalty. If you have an open mortgage you will not have any penalty to pay but your interest rate will typically be higher then that of a closed variable or fixed interest rate.
When making the decision on whether to refinance it is best to talk to your mortgage broker about it and review your entire situation, current and future goals with them. Your mortgage broker can do an Annual Review and look at any cost savings after factoring in the amount of the mortgage penalty. You could potentially save thousands of dollars or it may be worth it to wait till the end of your term. Your mortgage broker will be able to go into detail with their calculations and provide you with a report detailing the results so you can make the best decision that is right for you based on accurate information and your goals.
Some more refinancing information:
A mortgage transfer is when you move your current mortgage to from one bank or lender to another . When transfer you mortgage to another lender or bank you are doing it without changing the amount of the current mortgage or the length. If you change the amount or the length of the mortgage it would be a refinance of your mortgage. For example: You have a mortgage that is $200,000 at Bank A and you want to do a mortgage transfer to Bank B. The mortgage would still be for $200,000. If you wanted to change your mortgage from $200,000 to $250,000 then it would be a mortgage refinance because you are change the mortgage amount and not just doing a mortgage transfer from one bank to another.
If you are starting to look at a new home that is a great time to get your mortgage documents that will be needed into us. If you you have already found the home or property you want, it is very important to send in your mortgage documents as soon as you can, hopefully before you write an offer on the home. We will spend time looking at the mortgage documents to make sure that everything that has been given is accurate and see if we need anything else. If something needs correction or we need additional documents, it’s better to find that out as early as possible instead of during subject removal. Having the extra time will allow for things to go smoother during the buying process and hopefully will be less stress too.
Here's a list of common documents we'll ask for up front:
There are a number of mortgage documents that are needed when applying for a mortgage. When you are self employed there can be a a few additional ones needed depending on your situation. The sooner you start to gather them and send them in to us the sooner we can check them over and see if anything else is needed. By having the documents in as fast as possible it will give more time to deal with any hiccups or additional information that may be needed. We always want everything to go as smooth as possible and having your documents in early is one way to help the process to go much easier. We wouldn’t want to need more information and it’s close to subject removal time which would cause more stress.
Here's a list of common documents we'll ask for up front:
There is more to buying a buying a home then just having to pay the down-payment. There are additional costs that you need to keep in mind when determining how much you can afford to use for your down-payment. Your down-payment and closing costs can not be added into your mortgage and you will need to have them available with 3 months of documents to show where the money is. A good rule of thumb to allow for your closing costs is 1.5% of the asking mortgage amount. You don’t want to be caught off guard when you get to the end of the buying process and the lawyer asks you for money that you don’t have in your account. Being prepared ahead of time will make it less stressful for you.
Talking with your mortgage broker about your ideas, thoughts, questions, and goals are one of the best things you can do to get the best mortgage for you. There are so many types of mortgages and how they are set up and if your mortgage broker doesn’t know some things then they won’t be able to ensure that they are giving you the best mortgage options to chose from. The more you understand the better it will be. Having a mortgage is one of the biggest investments that people have and it should be given the time to make sure it’s the right one. When you start to discuss things with your mortgage broker, it may lead to other questions that were not thought of that could change what type of mortgage you would benefit most from. Some people want to pay down their mortgage faster, some want to treat it as an investment for tax purposes, while others want to leverage it to get more investments. Those are just three types of ideas that people want from their mortgage. Each one of them would be better set up on a different type of mortgage to maximize what it is that they want from it.
Some things you should discuss with your broker: